A Messaging App for Ethereum Just Raised $44 Million With Barely An Alpha
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A Messaging App for Ethereum Just Raised $44 Million With Barely An Alpha

The company is hoping that its user-friendly app design will help bring cryptocurrency to the masses.

Starting a little before 12pm EST today, Status, a messaging app and mobile browser enabling smartphones to connect to decentralized applications on the ethereum network, raised upwards of $44 million in a matter of minutes through a crowdsale of ethereum-backed tokens known as an Initial Coin Offering (ICO)—a method that has become the default way to raise funds in the cryptocurrency space.

The rapid and extremely lucrative sale comes hot on the heels of two similar ICOs within the past month, one for the online advertising-focused Basic Attention Token—which raised an astonishing $35 million in 30 seconds—and another for Bancor, a token meant to replicate some of the functions of currency exchanges, which raised over $150 million in just a few hours.


Status, a Swiss company, is one of a number of projects aiming to make cryptocurrency and the decentralized web more accessible to average internet users, part of which involves developing user-friendly mobile apps that can hide some of the technical complexity behind a familiar interface—in this case using a messaging service as the core offering, with integrations for many other applications plugging into it.

A mockup of Status. Image: Status

On the company's website the token sale has been billed as a "contribution period to the Status Network," and it's the nature of this network which investors are banking on to make the token more valuable in future. According to the whitepaper (pdf), this network will provide an ecosystem of different services for which the new currency—named the Status Network Token (SNT)—is either used as an exchange of value between users or required as an initial stake for participation. Among the examples listed, one use case states that a small amount of SNT will be needed in order to register usernames on the network, while another suggests that high status members can charge a fee to users outside of their contact network who wish to contact them.

All of this means that users of the network will need to buy SNT from those who already hold it, creating a demand that will in theory raise the value of the token above the price for which it was first bought—but of course this involves a degree of speculation, depending on the network being successful beyond just hardcore cryptocurrency enthusiasts.


ICOs have quickly become a staple of the ethereum landscape, particularly with the big influx of investment that has recently been seen in cryptocurrency overall. Ether prices have surged in 2017, up roughly 4500 percent since the start of the year and with a total market capitalization approaching that of bitcoin. As well as directly purchasing the currencies, investors have been putting large sums into projects built on top of ethereum, with startups often using the platform's smart contract functionality in order to launch a cryptocurrency token unique to the specific product or service they are offering.

But some industry insiders believe that the influx of hot money has led to a wave of rash investment without the usual checks and balances taking place. In a blog post written after the Bancor ICO, Emin Gün Sirer, a professor of computer science at Cornell University and a well known figure in the cryptocurrency world, raised numerous questions about the validity of Bancor's business model, and was sharply critical of the dynamics of the investment process as a whole.

"It's a fact that raising that much cash through a standard [venture capital]VC process would require a credible team, multiple rounds of funding, with much due diligence and milestones along the way," Sirer wrote. "None of that happened here—Bancor went from appearing on the scene 5 months ago to raising 9-digits cash with no demonstration that their scheme actually works."

With the token sale ongoing at time of press, the ethereum community is putting a lot of faith in the Status team's ability to deliver on their promises. The startup now finds itself with a huge amount of cash to throw at making these reality—far surpassing, for example, the $25 million that the early stage Google received in second round venture capital funding—and the pressure will be on to live up to expectations.

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